About Coca-Cola Direct Stock Purchase Plans

Coca-Cola was introduced to the world at a soda fountain in a little pharmacy in Atlanta, Georgia, on May 8, 1886. The soft drink was sold for a nickel a glass, and produced sales of around 9 drinks per day. Entrepreneur Asa G. Candler acquired control of the fledgling company in 1891 for around $2,300. Within 30 years, the company would be listed on the New York Stock Exchange at $40 per share. Now one of the most recognizable brands in the world, institutional and individual investors still consider the Coca-Cola Company to be the real thing when it comes to a good investment.

Significance

While many individuals consider investing in the stock market to be risky, complicated or only for the super rich, the fact is most workers who have a company retirement plan, a 401k or an Individual Retirement Account (IRA) have money invested in the stock market. Although the equities market has taken a beating lately, historically the stock market has outperformed every other savings and investment option available for comparable 10-year periods. Being able to participate in a direct stock purchase plan, such as the one offered by the Coca-Cola Company, allows individual investors the opportunity to own stock in a well-established company without the requirement to purchase a large block of shares.

Function

Computershare Trust Company functions as the administrator of Coca-Cola's direct stock purchase plan. Investors must purchase at least one share of Coca-Cola stock through a regular stock brokerage firm, bank or securities dealer and have that stock registered in their name to be eligible to participate in the plan. Computershare will be responsible for purchasing stock for all plan participants on or about the first of each month and for making dividend reinvestments each quarter. The Coca-Cola Company pays most of the brokerage costs, commissions and administrative fees associated with the plan.

Features

Coca-Cola's direct stock purchase plan allows investors to purchase stock by making a direct investment by cash, check or automatic deduction from their checking account. Investors can also reinvest all or part of any cash dividends generated from existing stock in the plan. Because all brokerage commissions are paid by the company, investors can increase their stock ownership without a sales commission. Investors retain full voting rights for each full share they acquire through the plan.

Size

Investors must own at least one share of Coca-Cola stock registered in their name in order to be eligible to participate in the direct stock purchase plan. Investors may contribute to their account once per month. Investments must be at least $10 but cannot exceed $125,000 in any calendar year. Investors may also elect to have cash dividends from shares held in the plan reinvested in additional Coca-Cola stock, or they may elect to receive cash dividends on a specific number of shares that you designate.

Benefits

Because the company pays all commissions and most of the administrative fees associated with the plan, more of the investors' money goes toward the purchase of stock. The low initial investment and subsequent investment amount allows people with little money to have access to stock ownership. Automatic withdrawal and dividend reinvestment options provide a painless way to invest, and the option to receive dividends on a specific number of shares gives investors the ability to receive a steady and predictable stream of quarterly income.

Resources

• Coca-Cola Company Annual Report